Slowly, very slowly, the truth is beginning to dawn. When borrowing gets out of hand it forms a dark and virtuous circle. Eventually the interest payments are such a drag on the economy that they hold it in stagnation, making reduction of the loans a sheer impossibility. Greece, Ireland and Portugal are already there. Without defaulting, they have little hope of future recovery. As this revelation dawns in the financial capitals of the West, a new terminology is heard on the media more and more; debt re-structuring. This is default by another name. This will bust the banks, just as the third world defaults did some years ago. Then it was possible for the banks to write off the catastrophe little by little as their main business grew, so we never knew they were technically insolvent. This time round that will not be possible. This is why the EU and the IMF are piling a burden on these bankrupt economies, which condemns their populations to years of decline.
Because they are not fools (any longer), having woken up to the reality of a financial crisis far greater than that of the Depression, the central banks and finance ministries are hoping to reduce the exposure of the banks by stomping up the cash to pay maturing loans, which would otherwise default. But in the end default will come and it will be the taxpayers in the solvent countries who will have to pay up.
What this brings home is this. Debt is derived from spending above income. Therefore budget deficits have to be brought into surplus. This means cuts. Cuts are painful. The killer, however, is the debt mountiain. By slowing cuts and borrowing more, you can ease the pain for a while. But like a malignant cancer, the rising debt and the cost of servicing it will prove fatal in the end.